Fiscal cliff deal costs Albany-area hospitals $36 million

The deal that kept the country from falling off a fiscal cliff will cost hospitals in the Albany, NY area more than $36 million.

Lawmakers wanting to prevent a 27 percent cut in Medicare payments to physicians, at least for another year, decided hospitals should make up half the difference, or about $15 billion. The reductions in Medicare payments to hospitals will take place over three years, 2014 through 2017.

This will cost New York hospitals more than $800 million, according to an analysis by the Healthcare Association of New York State. For the eight health care systems in the Albany area, the total is $36.5 million.

Not surprisingly, Albany-based St. Peter’s Health Partners, a system of four acute care hospitals, would be hardest hit with cuts totaling $11.4 million. Albany Medical Center stands to lose $9.8 million.

This is in addition to the cuts already scheduled to take place under the Affordable Care Act, which would cost area hospitals another $6 million over 10 years. And it may not end there. Unless Congress acts, federal budget sequestration, including another cut of 2 percent—or possibly more—to Medicare, will begin March 1.

“It would be one thing if we didn’t already have a series of Medicare cuts over the years,” said Gary Fitzgerald, president of Iroquois Healthcare Alliance, a Clifton Park based group representing 53 upstate hospitals. “But it adds up. And it does not just hurt Medicare patients, it hurts all patients if hospitals have to reduce staff or care.”

Susan Van Meter, vice president of federal affairs for HANYS, said Medicare reimbursements already fall short. As of 2010, the last year for which figures are available, the average Medicare margin for hospitals was 0.2 percent, “barely break even.” The average operating margin when all payers were included was 0.69 percent, and the bottom line margin was a negative 1.2 percent.

“You have to ask yourself, what’s left to cut?” she said.

The fiscal cliff deal did contain some good news for two local hospitals. St. Mary’s Healthcare in Amsterdam and Nathan Littauer in Gloversville are both categorized as “Medicare dependent hospitals” because they are small, rural institutions where Medicare patients make up at least 60 percent of discharges. The renewal of this program means these hospitals will be paid at a higher rate this year. Nathan Littauer will see a $1.15 million benefit while payments to St. Mary’s will rise $1.6 million.